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Question $4,$ P$11-59$A $($similar to$)$

HW Score: $50\%,10$ of $20$ points

Part $1$ of $6$

Points: $0$ of $8$

Stylistic Motors, Inc., was formed on January $1,2021.$ The following transactions occurred during $2021$:

$($Click the icon to view the transactions.$)$

Read the requirements

Requirement $1.$ Prepare Stylistic's income statement for the year ended December $31,2021.$ Use the single$-$step format, with all revenues listed together and all expenses together.

Stylistic Motors, Inc.

Income Statement

Year Ended December $31,2021$

Revenue:

Sales revenue

Expenses:

Cost of goods sold

Salary expense

Depreciation expense

Rent expense

Income tax expense

Net income $($loss$)$

Net income $($loss$)$

More info

On January $1,2021,$ Stylistic issued its common stock for $$350,000.$ Early in January, Stylistic made the following cash payments:

a$.$ $$150,000$ for equipment

b$.$ $$125,000$ for inventory $($five cars at $$25,000$ each$)$

c$.$ $$25,000$ for $2021$ rent on a store building

In February. Stylistic purchased six cars for inventory on account. The cost of this inventory was $$282,000($ $$47,000$ per car$).$ Before year$-$end, the company paid off $$112,800$ of this debt. The company uses the first$-$in$,$ firstout $($FIFO$)$ method to account for its inventory.

During $2021,$ Stylistic sold six autos for a total of $$426,000.$ Before year$-$end, it had collected $90\%$ of this amount. The business employs three people. The combined annual payroll is $$90,000,$ of which Stylistic owes $$12,000$ at year$-$end. At the end of the year, the company paid income taxes of $$14,000.$

Late in $2021,$ Stylistic declared and paid cash dividends of $$15,000.$

For equipment, Stylistic uses the straight$-$line depreciation method, over five years, with zero residual value.